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Oil Falls on Fears of Economic Stagnation

Crude oil went down to the five-week low and Brent dropped to the two-month minimum as the concerns for Europe intensified, fueling fears that the global economic growth would falter. The yield on the Italian and Spanish bonds increased. Germany opposed the idea to boost the European Stability Mechanism (Europe’s bailout fund). The indecisiveness of the European politician continues to hurt markets.

There were other reasons for the drop of oil. OPEC increased its production ceiling for the first time in three years. China’s manufacturing continued to decline this month, albeit with slower pace. China’s Manufacturing PMI fell to 49.0 in December from 47.7 in November, according to the flash HSBC/Markit estimate.

January futures for crude oil rose $0.01 to $94.96 per barrel, in electronic trading on NYMEX, following yesterday’s 5.2 percent drop to $94.95, the lowest closing price since November 4. Brent traded at $106.14 per barrel as of 4:33 GMT today on ICE after it tumbled during yesterday’s trading session from $109.47 to $104.83.
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